Buy Tata Elxsi; target of Rs 8989: Geojit

Geojit is bullish on Tata Elxsi has recommended buy rating on the stock with a target price of Rs 8989 in its research report dated January 30, 2024.

Broker Research

February 05, 2024 / 12:06 IST

Buy

26 Aug, 2025 12:21

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Geojit's research report on Tata Elxsi

Tata Elxsi (TELX) is a leading provider of IT ER&D (engineering, research and development) services. TELX has capabilities across Automotive, Broadcast & Communications, and Healthcare industries. Despite the slowdown, TELX reported revenue growth of 12% YoY and 3.7% QoQ in Q3FY24. The growth was driven by large deals in the healthcare & life science division, which grew by 4.6% QoQ. The Transportation segment witnessed steady growth of 1.9% QoQ. While there has been some delay in deal closure due to holidays. Operating margin came marginally below estimate at 29.6%(-62bps) due to wage hikes, sales promotions, and training, while a reduction in outsourcing contracts and a lower attrition rate to support margin. TELX’s business outlook continues to be solid, based on the top 10 customers for engineering services. Despite weak macro headwinds, overall hiring improved 2.7% QoQ, with a net headcount of 13,221. We expect that the industry is likely to witness a pickup by the second half of the year on account of the increase in US IT spending. We rollover and value at 45x FY26E EPS, factoring in strong earnings CAGR growth over FY24E–26E.

Outlook

We expect that the industry is likely to witness pick-up by second half of the year on account of increase in US IT spending. We rollover and value at 45x FY26E EPS, factoring in strong earnings CAGR growth over FY24E-26E.

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